Senate Dems Want $100B Distributed Based on COVID-19 Hotspots

April 16, 2020 - Healthcare providers in COVID-19 hotspots should get the rest of the $100 billion in emergency funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act, Democratic Senators recently told HHS.

“Providers in some states have been coping with increased costs and falling revenues for weeks and still haven’t reached the peak of their outbreak. We urge you to consider this variation when distributing rounds of funds from the $100 billion allocation, ensuring that relief is targeted to areas that need it most,” Senators Chuck Schumer of New York, Patty Murray of Washington and Ron Wyden of Oregon wrote Tuesday in a letter to HHS Secretary Alex Azar.

The letter comes after HHS announced late last week the first wave of funding to healthcare providers. HHS delivered $30 billion to healthcare providers based on their Medicare fee-for-service revenue from 2019, citing the need to get money to providers quickly.

Senate Democrats, however, criticized the methodology used by HHS to allocate nearly a third of the emergency funding earmarked for healthcare providers struggling to battle COVID-19.

“While we appreciate the need to get funds out quickly, it is our strong view that the administration must allocate the remainder of the fund in a more targeted manner,” Senators Schumer, Murray, and Wyden wrote.

READ MORE: Physician Practice Revenue Cut in Half Due to COVID-19 Crisis

Targeting areas hit hardest by the COVID-19 crisis would deliver funds to healthcare providers in the most need, the lawmakers argued. Providers in these COVID-19 “hotspots” are “overwhelmed” and need immediate relief to offset the costs associated with the pandemic, they added.

According to a report released last week by the Office of Inspector General at HHS, hospital revenues have declined dramatically since the start of the crisis as elective procedures that normally drive revenue have essentially ceased. At the same time, hospital leaders reported that costs have climbed as the organizations prepare for a potential surge of patients.

Smaller, independent hospitals, including rural and critical access hospitals, were more likely to be at greater financial risk as a result of COVID-19 compared to hospitals in larger systems, the report also found.

Yet the hospitals reporting the greatest financial risk may not have received adequate financial assistance from the CARES Act funding because of their size and payer mix, Senators Schumer, Murray, and Wyden indicated.

“Any and all criteria used to allocate funds to providers should be relevant to the specific needs created by the COVID-19 emergency and should not discriminate against providers in need based on payer mix,” they wrote.

READ MORE: Over Half of At-Risk ACOs May Quit MSSP to Avoid COVID-19 Losses

The decision to allocate CARES Act funding based on Medicare revenues also drew criticism from hospitals and health systems treating vulnerable patient populations.

“An allocation methodology that consists only of Medicare fee-for-service revenue could tilt the playing field against some essential hospitals, which care for disproportionate numbers of uninsured and Medicaid patients,” stated Bruce Siegel, MD, MPH, president and CEO of America’s Essential Hospitals.

“It is especially concerning because their narrow margins and front-line role mean these hospitals are among those in greatest need of funding support during this public health emergency.”

HHS has indicated that a portion of the CARES Act funding earmarked for healthcare providers will go toward reimbursing providers for treating uninsured COVID-19 patients.

However, top Senate Democrats also took issue with the department’s plans, saying they were “alarmed to learn of the Administration’s plan to use these essential funds as a political tool.”

READ MORE: HHS Pays Out First Round of CARES Act Funding to Hospitals

The lawmakers echoed concerns from leading hospital groups and healthcare advocacy groups that using the $100 billion in emergency funding to offset uncompensated care costs is not a solution for the problem facing the uninsured: lack of comprehensive healthcare coverage.

“Ultimately, while this policy will help uninsured patients and discourage them from delaying care if they develop COVID-19, it is not a substitution for comprehensive health insurance,” experts from the Kaiser Family Foundation stated earlier this month in a report.

The report from Kaiser Family Foundation showed that the policy could account for more than 40 percent of the $100 billion reserved for healthcare providers.

“This would leave less funding for hospitals in states with lower uninsured rates that did expand Medicaid and, in some cases, also instituted new open enrollment periods in state-based exchanges,” the experts added.

Instead, the groups are pushing for the Trump administration to expand healthcare coverage during the COVID-19 crisis by opening a special enrollment period for the Affordable Care Act marketplaces. The AHA also backed proposals to expand Medicaid and use the National Disaster Medical System to cover care.